(a) Policy. This section, in conjunction with Ohio R.C. 135.14, and ordinances adopted by the Village Council, as amended, will govern the investment activities of the Village. It will be reviewed annually for compliance and to assure the flexibility necessary to effectively manage the portfolio.
(b) Scope. This investment policy applies to all financial assets of the Village. These funds are accounted for in the UAN Accounting System.
(c) Objectives. The overall objective of the investment program is to maximize the returns of the Village's excess cash balances consistent with complete safety of the portfolio's principal value and the liquidity desired.
(1) Safety. Safety of principal is the foremost objective. Investments of the Village shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
(2) Liquidity. The investment portfolio will remain sufficiently liquid to enable the Village to meet all operating requirements which might be reasonably anticipated.
(3) Return on investments. The investment portfolio will be designed to maximize rate of return without jeopardizing the objectives of safety or liquidity. The six-month treasury bill will be used as a benchmark to determine the extent to which this objective has been met. This benchmark is subject to change as investment strategies change.
(d) Authority for Investment Activity. The authority to execute investment transactions is delegated to the Fiscal Officer who shall establish written procedures for the operation of the investment program consistent with this investment policy. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Fiscal Officer.
(e) The Standard of Prudence. The standard of prudence to be used by investment officials shall be the "prudent person" standard and shall be applied in the context of managing an overall portfolio. Investments shall be made with judgment and care under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. Investment officers acting in accordance with written procedures and this investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
(f) Ethics and Conflicts of Interest. Officials and employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions.
(g) Authorized and Suitable Investments. The Village will be permitted to invest in any security specifically authorized by Ohio R.C. 135.14, as amended. The Village will not invest in derivative securities as defined in the Ohio Revised Code. The use of leverage is prohibited. A copy of the Village ordinances and Ohio R.C. 135.14 listing permitted securities will be kept with this policy.
Eligible obligations include but are not limited to:
(1) Obligations of the United States Government
U.S. Treasury bills
U.S. Treasury notes
U.S. Treasury bonds
(2) Instrumentalities of the Federal Government
Federal Farm Credit Bank
Federal Home Loan Bank
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
(3) Commercial paper issued by any corporation incorporated under the laws of the United States or any state, provided that two nationally recognized rating agencies have ranked the commercial paper in the highest category.
(4) Banker's acceptances, provided that they mature in 270 days or less and are eligible for purchase by the Federal Reserve System.
(5) The Ohio State Treasurer's Asset Reserve Fund (STAR Ohio)
(6) Repurchase agreements with eligible institutions
(7) Bank certificates of deposit with eligible institutions
(8) Bonds and other obligations of the State of Ohio
(h) Diversification. The Village will diversify its investments by security type and institution. With the exception of U.S. Treasury securities, those instruments completely guaranteed by the U.S. Treasury as payment of the principal and interest, and the Ohio State Treasurer's Asset Reserve Fund (STAR Ohio), no more than 50% of the Village's total investment portfolio will be invested in a single security type or with a single financial institution.
(i) Maximum Maturities. No investment transaction shall be executed unless, at the time of investment, all members of the Investment Board (Mayor, Fiscal Officer, and Solicitor) unanimously agree that there is a reasonable expectation that the investment can be held until its maturity. No investment shall be redeemed or sold prior to maturity unless required for liquidity purposes, to maintain the portfolio's current characteristics and/or to enhance its yield. Swapping (i.e., the simultaneous sale of one security and the purchase of another) will be permitted provided that the loss, if any, on the sale is expected to be recovered in one-half the time remaining to maturity of the security being sold.
The Village will not directly invest in securities maturing more than two years from the date of purchase unless the maturity of such investments is made to coincide as nearly as practicable with the expected use of the funds. The average weighted maturity will not exceed one year. Commencing January 1, 2007, interest earned from investing money shall be credited to the Capital Improvement Fund except where otherwise required by law.
(j) Authorized Financial Dealers and Institutions. All transactions will be done on a competitive basis, whenever possible. Bids and offerings will be solicited from three dealers and recorded. In the event that two or more dealers are tied with the lowest price, the transaction will be awarded at the discretion of the Investment Board.
A list of approved securities dealers will be maintained with this policy. Investments may be safekept at any of the approved dealers or banks as established by the Investment Board.
(k) Reporting. The Fiscal Officer shall provide to the Investment Board (Mayor, Fiscal Officer, and Solicitor), and to Council, monthly reports which will present a clear picture of the status of the current investment portfolio. Current yield as compared to the designated benchmark will also be presented in order to determine the extent to which investment objectives have been met. These reports will be used by the Investment Board to determine and set investment requirements for future months.
(l) Investment Policy Adoption. The investment policy of the Village shall be adopted by resolution of the Village Council. This policy shall be reviewed annually by the Finance Committee and any modifications made thereto must be approved by Council.
(Res. 1996-19. Passed 11-19-96; Ord. 2007-24. Passed 6-19-07.)